“The New Digital Age“, the newly released book by Eric Schmidt, Google’s executive chairman,and Jared Cohen, former US government adviser, has sparked controversy not only because of the personal influence of its authors, but also due to their statements on the phenomenon of hacking in China.
According to the British newspaper Telegraph, Schmidt and Cohen argue that “the Chinese state backed cyber crime for economic and political gain, making it the biggest online menace in the world.”
“The disparity between American and Chinese firms and their tactics,” they claim, “will put both the government and the companies of the United States at a distinct disadvantage, [because] the United States will not take the same path of digital corporate espionage, as its laws are much stricter (and better enforced) and because illicit competition violate the American sense of fair play.”
Once again, the hysterical fear the West feels towards China can be felt in the media and in the works of many people who write about China, depicting it as a threat.
First of all, I would like to point out that the “prediction” that there will be a revolution in China in the coming decades is wishful thinking. As long as China grows and the overall situation of large parts of the population improves, why should they oust their government and choose a highly uncertain future? If we look at the history of revolutions, we will see that they are mostly followed by chaos. No one knows if the state that succeeds the overthrown one will be any better.
Take Russia as an example. The revolution of 1917 overthrew a regime, but what came in its stead? Years of poverty, chaos, terror and a dictatorship that was much more brutal than the Tsarist state had ever been. A similar situation in China in 1911. After the Wuchang Uprising and the Xinhai Revolution, the Republic of China was established. But the “struggle” for the Republic, an era of chaos and wars, lasted for half a century, until the government of the Republic was defeated by the Communists and retreated to Taiwan, where the Republic of China still exists today.
It seems to me that this what the West wishes. An era of chaos and instability in China, and consequently – so some Westerners hope – a Westernization of China.
What Mr Schmidt says about hacking in China might be true, though I haven’t read his book and I therefore cannot judge his arguments. But industrial espionage is not the real issue. The USA has a trade deficit with around 90 countries, including Singapore, Germany, Japan etc. The problem is that we have developed a wrong type of market economy, a too liberal market economy, of which some countries take advantage by trying to run large trade surpluses. When a country declares as its purpose to run trade surpluses, it also declares that it wants other countries to run a trade deficit, which means these countries won’t produce enough to pay for what they buy. The financial bubble and other bubbles hid this problem for about two decades, but now we must realize that if we let countries (not just China) pursue a trade surplus polic,y there will always be great disequilibrium in international trade.
Huawei or other Chinese companies are not dangerous, unless we let them flood us with their products at our own expense. But there is an easy and reasonable way to solve it. And this solution is not hysterical China bashing. We must have an industrial policy, we must regulate the financial markets, we must have a reasonable wage policy, and we must stop the trade surplus policy of state capitalist economies through tariff imports, until these countries focus more on their domestic markets and adjust wages to productivity. Only if all countries improve their productivity and increase wages according to it will we have a fairer international trade.